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Warnings That A Massive Stock Market Crash Is Imminent

By Michael Snyder, on October 3rd, 2012

In the financial world, the month of October is synonymous with stock market crashes. So will a massive stock market crash happen this year? You never know. The truth is that our financial system is even more vulnerable than it was back in 2008, and financial experts such as Doug Short, Peter Schiff, Robert Wiedemer and Harry Dent are all warning that the next crash is rapidly approaching. We are living in the greatest debt bubble in the history of the world and Wall Street has been transformed into a giant casino that is based on a massive web of debt, risk and leverage. When that web breaks we are going to see a stock market crash that is going to make 2008 look like a Sunday picnic. Yes, the Federal Reserve has tried to prevent any problems from erupting in the financial markets by initiating another round of quantitative easing, but 40 billion dollars a month will not be nearly enough to stop the massive collapse that is coming. This will be explained in detail toward the end of the article. Hopefully we will get through October (and the rest of this year) without seeing a stock market collapse, but without a doubt one is coming at some point. Those on the wrong end of the coming crash are going to be absolutely wiped out.

A lot of people focus on the month of October because of the history of stock market crashes in this month. This history was detailed in a recent USA Today article….

When it comes to wealth suddenly disappearing, October can be diabolically frightful. The stock market crash of 1929 that led to the Great Depression occurred in October. So did the 22.6% plunge suffered by the Dow Jones industrial average in 1987 on “Black Monday.”

The scariest 19-day span during the 2008 financial crisis also went down in October, when the Dow plunged 2,675 points after investors fearing a financial collapse went on a panic-driven stock-selling spree that resulted in five of the 10 biggest daily point drops in the iconic Dow’s 123-year history.

So what will we see this year?

Only time will tell.

If a stock market crash does not happen this month or by the end of this year, that does not mean that the experts that are predicting a stock market crash are wrong.

It just means that they were early.

As I have said so many times, there are thousands upon thousands of moving parts in the global financial system. So that makes it nearly impossible to predict the timing of events with perfect precision. Financial conditions are constantly shifting and changing.

But without a doubt another major financial collapse similar to what happened back in 2008 (or even worse) is on the way. Let’s take a look at some of the financial experts that are predicting really bad things for our financial markets in the months ahead….

Doug Short

According to Doug Short, the vice president of research at Advisor Perspectives, the stock market is somewhere between 33% and 51% overvalued at this point. In a recent article he offered the following evidence to support his position….

● The cyclical P/E ratio using the trailing 10-year earnings as the divisor (more)

● The Q Ratio, which is the total price of the market divided by its replacement cost (more)

● The relationship of the S&P Composite price to a regression trendline (more)

Peter Schiff

Peter Schiff, the CEO of Euro Pacific Capital, has been one of the leading voices in the financial community warning people about the crisis that is coming.

During a recent interview with Fox Business, Schiff stated that the massive financial collapse that we witnessed back in 2008 “wasn’t the real crash” and he boldly declared that the “real crash is coming”.

So is Schiff right?

We shall see.

Robert Wiedemer

Economist Robert Wiedemer warned people what was coming before the crash of 2008, and now he is warning that what is coming next is going to be even worse….

Financial author Harry Dent believes that the stock market could fall by as much as 60 percent in the coming months. He is convinced that stocks are hugely overvalued right now….

“We have the greatest debt bubble in history. We will see a worldwide downturn. And when you are in this type of recessionary environment stocks should be trading at five to seven times earnings.”

So are these guys right?

We shall see.

But I do find it interesting that some of the biggest names in the financial world are currently making moves as if they also believe that a massive financial crisis is coming.

For example, as I have written about previously, George Soros has dumped all of his holdings in banking giants JP Morgan, Citigroup and Goldman Sachs.

Infamous billionaire hedge fund manager John Paulson, the man who made somewhere around 20 billion dollars betting against the U.S. housing market during the last financial crisis, is making massive bets against the euro right now.

So where are these financial titans putting their money?

According to the Telegraph, both of these men are pouring enormous amounts of money into gold….

There was also news last week in an SEC filing that both George Soros and John Paulson had increased their investment in SPDR Gold Trust, the world’s largest publicly traded physical gold exchange traded fund (ETF).

Mr Soros upped his stake in the ETF to 884,400 shares from 319,550 and Mr Paulson bought 4.53m shares, bringing his stake to 21.3m.

At the current price of about $156 a share, these are new investments of about $88m of Mr Soros’ cash and more than $700m from Mr Paulson’s funds. These are significant positions.

So why would they do this?

Why would they pour millions upon millions of dollars into gold?

Well, it would make perfect sense to put so much money into gold if a massive financial crisis was coming.

So is the next financial crisis imminent?

We will see.

Most “financial analysts” that appear in the mainstream media would laugh at the notion that a stock market crash is imminent.

Most of them would insist that everything is going to be perfectly fine for the foreseeable future.

In fact, most of them are convinced that quantitative easing is going to cause stocks to go even higher.

So how can I be writing now about the possibility of a stock market crash?

Aren’t I contradicting myself?

Not at all.

Let me explain.

The first two rounds of quantitative easing did indeed drive up stock prices. The same thing will happen under QE3, unless the effects of QE3 are overwhelmed by a major crisis.

For example, if we were to see a total collapse of the derivatives market it would render QE3 totally meaningless.

Estimates of the notional value of the worldwide derivatives market range from 600 trillion dollars all the way up to 1.5 quadrillion dollars. Nobody knows for sure how large the market for derivatives is, but everyone agrees that it is absolutely massive.

When we are talking about amounts that large, the $40 billion being pumped into the financial system each month by the Federal Reserve during QE3 would essentially be the equivalent of spitting into Niagara Falls. It would make no difference at all.

Most Americans do not understand what “derivatives” are, so they kind of tune out when people start talking about them.

But they are very important to understand.

Essentially, derivatives are “side bets”. When you buy a derivative, you are not investing in anything. You are just gambling that something will or will not happen.

A derivative has no underlying value of its own. A derivative is essentially a side bet. Usually these side bets are highly leveraged.

At this point, making side bets has totally gotten out of control in the financial world. Side bets are being made on just about anything you can possibly imagine, and the major Wall Street banks are making a ton of money from it. This system is almost entirely unregulated and it is totally dominated by the big international banks.

Over the past couple of decades, the derivatives market has multiplied in size. Everything is going to be fine as long as the system stays in balance. But once it gets out of balance we could witness a string of financial crashes that no government on earth will be able to fix.

Five very large U.S. banks (including Goldman Sachs, JP Morgan and Bank of America) have combined exposure to derivatives in excess of 250 trillion dollars.

Keep in mind that U.S. GDP for 2011 was only about 15 trillion dollars.

So we are talking about an amount of money that is almost inconceivable.

That is why I cannot talk about derivatives enough. In fact, I apologize to my readers for not writing about them more.

If you want to understand the coming financial collapse, one of the keys is to understand derivatives. Our entire financial system has been transformed into a giant casino, and at some point all of this gambling is going to cause a horrible crash.

Do you remember the billions of dollars that JP Morgan announced that they lost a while back? Well, that was caused by derivatives trades gone bad. In fact, they are still not totally out of those trades and they are going to end up losing a whole lot more money than they originally anticipated.

Sadly, that was just the tip of the iceberg. Much, much worse is coming. When you hear of a major “derivatives crisis” in the news, you better run for cover because it is likely that the entire house of cards is about to start falling.

And don’t get too caught up in the exact timing of predictions.

If a stock market crash does not happen this month, don’t think that the storm has passed.

A major financial crisis is coming. It might not happen this week, this month or even this year, but without a doubt it is approaching.

And when it arrives it is going to be immensely painful and it is going to change all of our lives.

I tried it last year, they said they wanted cash.
You see everyone has to pay their taxes.

Calvin

Thanks Michael, I agree that the a crisis is coming and I do appreciate you keeping us informed.

Mondobeyondo

Yes, a crisis is coming. There’s little doubt about that. When and how, is disputable. Nobody knows exactly when, or exactly how, things will go down. But it is coming.

People generally tend to ask for specific dates and stuff. Okay, here’s one. February 14, 2014. Sounds good to me. Why? Because it’s Valentine’s Day, and I hope to be in love by then. Other than that – no specifics. Sorry.

Mondobeyondo

Oops, sorry. I know Michael is supposed to be answering these questions from our dear contributors. I just get on a roll sometimes. My apologies.

Michael

I like it when other people jump in, because I am afraid that I don’t have time to respond to every question that gets left on the site.

I wish that I did.

Michael

dmitry

“That is why I cannot talk about derivatives enough”.

Dear Michael,

Just if you feel fine with it, please enlighten us more about derivatives.

Thank you,

Dmitry

Mondobeyondo

A derivatives collapse will be the death knell for our economy. That would be the Mother of All Time Bombs. When will they go off? Don’t know. Hopefully never. Pray it doesn’t happen. Because if it does, it truly will be TEOTWAWKI. (The End Of The World As We Know It).

But… you know? Even MacGyver can’t stop this one from happening. Not with all the duct tape in the world. I’m not optimistic about this, sadly.

http://endzone.weebly.com Craig

Sorry Mike, I’m kind of in a flippant mood tonight. For some reason your post made me think of a song we listened to when I was in my early teens in 1971.

AGENDA 21. TPTB want to implement their NEW WORLD ORDER, their WORLD GOVERNANCE, dominated by the antiChrist.

Timothy

Michael-
Aside from reading your articles I rarely if ever hear about the derivatives market and what a mess it has become, so thank you for shedding light on the issue.
My worry with the derivatives crisis unfolding (late stages) is that mainstream media would neglect to tell the public about the situation for one of two reasons-
A- Like you stated not many people know about derivitives anyway so why even make news over it. let them figure it out for themselves type of deal.
B- Avoid telling the public until it is full blown pandemonium then leak it so that there is REALLY nothing anyone can do for final preparations/getting out of the way of the storm.

Optimistic Pessimist

Unless you are in the financial world or come across a site like this, the majority of people would not be able to tell you what a derivative is.

OP

Paula New Zealand

I find that you can warn and warn and all you get is ignored and others who are so called professionals who charge an arma and a leg to inform, and mostly get it wrong, are honoured and quoted all over the place.
I have come to the conclusion it is not worth it.

All the above are great, definitely ammo, also the knowledge to build and repair is a big plus.

http://www.prepper-resources.com PJ Prepper

Prepguy,

Good starting list, but you forgot the most important item: Food. The vast majority of people do not have more than a day or two stocked up at home. If we have a food shortage or prices simply become insane, people will do almost anything to feed their family. That extra bag of rice or #10 can of dehydrated beef will be much more valuable for barter than precious metals.

Forget the looters, druggies, and all of the others we preppers like to visualize “coming over the berm” while we prep. Think about the vast majority of people who live in suburbia who will FREAK OUT when their debit card doesn’t work, or the store shelves are empty. Most of those people (initially) will still maintain some level of civility while waiting for help that might not ever come.

At that point I bet you could score quite a few bargains trading off some of your extra food stash or medical supplies. It doesn’t even have to be goods, you could trade services. Some food for help filling sandbags or digging a well, or pulling extra security etc etc.

Just something to think about, your situation may vary.

PJ

Prepper-Resources.com

Kevin2

I think the king of the hill will be owners of what was once called junk yards but more accurately automobile salvage yards. Those spare parts will be like gold.

Being capable of fixing things and having the parts to do it will be a HUGE business across the board.

Alvin

A couple of suggestions.

If you have $ 100 go to your bank and buy a box of nickels ( 2000 nickels). The metal content is worth slightly more than 5 cents so it should keep up with inflation. True that you won’t get rich but they can be used to make change with when a silver dime is just not quite enough. Besides you won’t lose interest on your money as there is no interest on savings.
The copper penny ( before 1982) same principal, toss all pre 1982 pennies in a jar, just might come in handy. Expect that power will go out for periods of time so battery powered lanterns will be handy, most sporting goods stores have sales on them monthly so get a couple extras. Batteries for lanterns, radio’s etc – lots of them and some of them now are still good after 10 years, if we have power shortages they will disappear fast and be good trading items. Mountain House is a good source for long term food supply and lasts many years.

K

Trade goods? If things get that bad, how will you safely trade? If desperate people know, you have goods to spare. Why will they just not take them from you, by force. Low profile is the best way. People around you are losing weight, you better be losing weight. People around you wearing worn out clothes, you better be wearing worn out clothes. If you draw attention to yourself. You better have a fortress, with a lot of firepower.

D

K… you are absolutely right. The cities, the masses, without food ~ a month. Without water ~ a week. Hungry gangs foraging into country. A lot of logistics expounded by the dreamers is silly. There will be a new social structure forming from what is left. The new trading structures are going to be very different. Notwithstanding, as the Clif’s Webbots imply, the emergence of a new currency is clear… forget the metals, that may come later, when (if) new social structures form… it was referred to as ‘Caloric’. Yes, a small can of tuna can far exceed a value of any gold coin for a long time.

GSOB

D

‘Yes, a small can of tuna can far exceed a value of any gold coin for a long time.’

Yea, keep breeding. Better get lots of diapers. Also how much ammo do you kooks need anyway? How many people are you going to shoot? I know you maniacs already have thousands of rounds scattered around the farm

MizHenrietta

I have been a prepper all my life. I was raised to be one. Add (in addition to guns and ammo) toilet paper, salt, spices (bought from Spice Barn in bulk and repackaged), Zip-Loc bags in all sizes — both freezer and regular, suagar, vinegar and non-hybrid heirloom seeds for both personal use and bartering. An excellent source is http://heirloomseeds.com/ which I have used for years. The prices are very reasonable and the quality is excellent. Non-hybrid seeds are a great renewable resource that will soon be worth their weight in gold. Get yourself a good how-to book here: http://tinyurl.com/8pjqk8r

gnasher49

If you don’t have water filters or a means to otherwise produce potable water you will die within a few days.
You and yours can probably survive a few weeks living on vegetables and forage, but you need WATER.

DownWithLibs

Medical supplies and the knowledge to use them.

Timbo

I would definitely consider .22LR ammo a staple after the meltdown. Having a Smithy lathe/mill would be great. Maybe a load of coal and a forge too. Couple good horses for work and travel. Can’t emphasize enough though: Small arms and stockpiles of ammo. Get knowledgeable on how to load ammo. Get paper instructions on how to make powder and cast bullets. Check online to see what parties your neighbors belong too. Could indicate who you can trust later down the road.

GSOB

prepguy

When the SHTF, make sure you have enough toilet paper.

Liberty68

I’ve been thinking reading glasses would be good to stock up on. You can get them in multi-packs at Sam’s. Also, sewing supplies to repair clothing. Some Dollar Stores have tarps for a $1 and they will probably be worth WAY more than $1 in the future.

Geoff

Hi Michael,

I’m a software developer in Sydney, Australia. I am extremely concerned about the possible state of civil society once the crash comes. With societal breakdown & possible WWIII from the invasion of Iran, do you think that people in my profession (tech/IT/etc.) will still be able to make a living?

Michael

Maybe.

Michael

Colin

When World War III comes, the war will be fought over resources. I believe this war will come this century. The crisis in the developing nations is growing, and some experts predict that by 2030 a hundred million people will have died indirectly or directly due to the change in weather.

Liz

Hey Michael, what jobs do you think will do the best?

Michael

I think that if you can work for yourself that is best – that way at least you can’t be fired.

Michael

RICH99

Yea IF it comes and its looking like it isn’t coming any time soon !!!!

Caitlin

Being a software developer myself, I’ve given this issue much thought.

It depends on the nature of the breakdown. As long as computers are in fairly widespread use, there will be a need for hardware and software experts even in an economic catastrophy. If, however, we get thrown back into a low-tech existence, there may not be much call for programmers for a long time. Note that even if the economy doesn’t melt down, another Carrington Event (extreme solar activity that is damaging to electronics) could be sufficient to drive the world into a low-tech existence until the power grids can be repaired/replaced, which could take years in some scenarios.

Personally, I recommend planning for both possibilities. Keep your tech skills current and maybe even diversify by learning additional programming languages, apps, platforms, whatever. Focus on technologies that either are already commonly used where you are or look like they are about to come into common use. That way you have options if your specific specialty is no longer viable but tech in general is still in demand.

On the other side, think about picking up some practical low-tech skills. Look for things that would be useful but not very common if the tech world collapsed; things that people will need but not have the skills to do/obtain in even a crude way. It’s an interesting thought experiment to think about everything you use in your daily life and how you would eliminate modern tech from the chain that brought it to you. Before long, you’ll have a very long list of possible skills/occupations that might be useful after the crash and could even earn you an extra buck or two right now as a hobby.

As one example, anyone can figure out how to fashion a crude coverup out of string or tape and cloth, leather, or even paper bags, but very few people know how to turn a fresh skin into leather by tanning and even fewer can do it with traditional materials instead of modern chemicals. Lots of people like alcoholic beverages and alcohol is also useful as an antiseptic, but not many people know how to brew beer/wine or operate a distillery. (Make sure that your new-found hobby is either legal where you are or that you are willing to risk the consequences. Homebrewing is okay in many places, but owning a still may require a license.)

After a collapse, the world will belong to those “renaissance men/women” who can do a lot of things passably well without relying on modern conveniences.

Get to know your neighbors. Bond with them. Get to know who has what skills and try to build a solid community. Maybe even establish a community barter club that could survive a collapsing monetary system. People who can work together, help each other, protect each other, and trust each other will have an easier time of it than a neighborhood filled with “lone wolves” who may become inclined to prey on each other until only the strongest remain.

JustanOguy

Actually, I think there is going to be a world of opportunity in the underground for Tech/IT people.

Redneck Joe

I’m an RF Engineer in the cellular industry (consultant). People around me spend their money on mortgages, gadgets, and SWPL car payments, and complain about how tightly they are stretched as they fear layoffs. My expenditures in the last 2 years: land, cabins, wood stove, ammo, freeze dried food, solar chargers, water purification, tools, etc. I live like my job can end at any time (which is of course true).
Balance – hope your income source lasts for a while but prepare.
But I know next to nothing about your country. I am in the southeastern US.

liberranter

Geoff, you’ll most DEFINITELY still be able to make a living, as will people in nearly every profession that responds to market demand from willing customers (people who “work” in the government sector, however, will be shit out of luck unless they have some marketable skills to fall back on). The big change will be in how you’re compensated for your work. Expect that money, as we all now know it and use it, will be a thing of the past (after TSHTF, fiat money will be worth less than the paper or cheap metal it’s printed on/engraved with). BARTER will be the primary means of exchange, either through goods or services in kind.

DownWithLibs

It may be in your best interest to learn a side trade (hands-on type) in your spare time. Learn welding or general Mr. Fix-it type of things, basic first aid, something that you could serve others with and be able to barter and hopefully get by.

JasonS

no

r.bitting

More than a few of you people better quit focusing on an economic collapse and start seeking God with all your heart, because you are about to be destroyed for a lack of knowledge. You are about to die in your sin without Christ, who is the ONLY acceptable attonement for your sin. Better humble yourself and ask for mercy while the opportunity still exists. What good will all your prepping do you, if the wrath of God abides on you. Your life, comparatively speaking, even if you live a 100 years, will seem like but a few days as you lie on your death bed and you stare eterinity in the face. You know theres a God, and you know in your heart He’s going to require you to give an account for your life, and you know in your heart that God will judge you. Be honest with yourself. Only faith in Jesus Christ’s sacrificial death on the cross, and trusting on His paying your sin debt, will save you on this day. You will not stand before God with your own righteousness on that day. Make haste and get right with God now, and God will call you sons and daughters. May God bless you with his truth.

MizHenrietta

I always heard God helps those that help themselves. I do my share of talking to the good Lord — at the same time, I work at protecting my family for the long haul.

http://yahoo.com richard swank

THAT’S WHAT I SAID ONE TIME AND GOT CRUSIFIED BECAUSE IT IS NOT IN THE BIBLE.

Mustard Seeds

Richard,

Ignore criticism when you know you are doing the right thing. One of the most famous passages in the Bible is a “prepper” passage…..Proverbs 31.

Mustard Seeds

I am not saying r.bitting is wrong. He is speaking the truth. We must put our faith in God.

God also expects us to sow the seed, grow the seed and harvest the seed.

Are there not passages in the Bible where before a famine, God warned the people to store up food?

justamom

A very sobering reminder, r.bitting— needed and appreciated. Men were marrying and giving in marriage until the day Noah entered the ark and God closed the door….

There is far more to fear than a stock market crash. Life is short. Eternity is long.

RICH99

You know what’s funny…..they said the same ********** about September and look what September brought!! This is getting to be real ************* now with this doom propaganda !!!

Michael

Rich:

I wrote it in September but I said it about “the fall”. And I never predicted or guaranteed any particular event would happen. I simply pointed out the trends and the approaching storm.

A stock market crash is going to happen at some point, but I am not predicting it for a particular month.

Michael

RICH99

You wanna know what’s gonna happen….just look at the body language or facial expressions of our elected officials and to me they look very calm to be facing a major crash and that tells me that a crash isn’t happening !!!

DownWithLibs

Or they have a solid exit plan that they don’t intend to share with you or the masses (silently flipping you off?! )

Irritable

Gerald Celente and Max Keiser both said something about next spring being “it” — that the **** will indeed hit the fan.

I think what’s been happening since 2007 is just a progressive demise. It hasn’t been a slow one either. For those who have kept their jobs throughout the entire collapse, things aren’t as apparent. For those who have already been laid off once or more than once, have had hours cut, or furloughs, etc., they have a differing opinion.

I don’t listen to the people who have been mostly unaffected as of yet. These are the ones who are perpetuating apathy. It’s the people who have been through hell or are having a tough time we need to listen to. We need to listen to their stories and what they’ve been through, because it’s going to happen on a grand scale in the near future. Some of these people have even left the USA to find something better, at least for the time being.

It’s important to listen to alternative views, because if you only listen to the crowd, you get a very biased viewpoint. This is why I read alternative news and check out the comments, because I get a real perspective on what’s going on.

http://www.prepper-resources.com PJ Prepper

Michael,

Great article and thanks for consolidating all of that information. Have you been reading about what is going on in Iran? Tomorrow I’m going to look into some of the “other” areas of the world that are experiencing pain besides Europe (i.e. Asia, Iran). I think if we step back to take a look at the big picture the bubble is indeed building worldwide. It’s almost as if “they” want it to happen, so when it pops “they” can be standing there with the one and only solution. Scary times indeed. Thanks for all your work and as usual I’ll link to this in the morning.

Take Care

PJ

Prepper-Resources.com

Irritable

I agree. They are intentionally letting it build up. Most people are not wise enough to realise this though, they expect a “sudden” collapse only in the USA.

How wrong most humans with their little minds are.

If they want to orchestrate bringing in a solution to a major problem (i.e. global collapse), that problem will have to affect the entire world, not just the USA. I find it funny how some people still think their country is unaffected. Canadians for example, and some middle-class Mexicans, live in a complete bubble of their own.

Pastor Glenn

Know what else, folks? The FDIC is BROKE. I recommended to my church board some six months ago that we pull our church funds out of a bank and put them into a credit union, and thankfully, they listened to me. Recently, as in a couple of days ago, the (broke) FDIC “investigated” one of the major banks which has many branches in our area for many ‘issues’. The fact that the bank where the church’s funds were didn’t happen to be this bank is irrelevant. By the way, our little church puts 10% of its gifts given each Sunday, into a fund for the benefit of others and that’s how it is spent, and right now it is being built-up in anticipating of obtaining Thanksgiving meals and Christmas gifts for needy families.

Pastor Glenn

By the way, it is entirely possible that historians will point to October 3, 2012 as the beginning of World War III. I’m talking about Turkey losing patience with Syria.

Spiritually speaking, when you see Damascus blow up – you’ll know the true end is pretty close.

It won’t hurt to find out what Jesus Christ is all about and do it soon.

Time is literally almost up.

Df

Yes my eyes are always on the middle east and Jersusalem but lately on Damascus also. What’s happening there right now is horrific and knowing what’s to come is even more heartwrenching because of innocents. I think the burden of Damascus will be the catalyst for ME erupting and prophecy moving into hyperdrive. Too many coincidences at this point. The earth and all that is in it is being prepared for time of judgement and redemption.

Pastor Glenn

Great still photos of cars crunched, to help make people picture a little bit of what is coming in a financial sense.

Watch this video and understand that this is what the global economy is going to do, when it “finally does it”

I… don’t understand something. If they were all specuative side bets with money that doesn’t exist… why would the government(s) of the world not simply evaporate them? I mean… they don’t actually exist right?

Wow I’m ignorant on this one.

What would REALLY happen if that mess blew up? What would be the options? I mean its a sure bet we’re not going to sit there and go broke for the next 400 years. Even if the option is all out war we’d do that before we’d eat 1.5 quadrillion dollars.

CAngel

This is my thought also, actually I was thinking there isn’t enough money in the entire world to cover these ‘bets’ so how could they be honored.

William

It’s always important to be ready for a crash. I don’t recommend stock ownership to most people, especially when paying down debt is likely the best and safest return possible. Also, just owning property in your own neighborhood can be better than stock investing.

William

Most October’s the market doesn’t crash.

Wiedemer is way off. 3 months to go and real inflation is only around 10%.

Schiff and Dent are closer, the markets are overvalued and only propped up by central bank money printing. Volumes are wildly low.

Dent is right there is a world debt bubble, but the central banks are neck deep in it after buying so much sovereign debt as part of QE.

Central banks can’t let sovereign debt be priced by the market or the US and most of Europe goes Greek as rates go to 4-6%. Central banks have bought so much debt that they can’t allow rates to go up on their own holdings collapse when the debt bubble pops. All they can do is keep printing because hyperinflation is actually a positive for them compared to the debt bubble popping.

Oh and for all you Democrats and Republicans who support the criminals who take your money in front of your EYES, lie to you on TV casually, and love to sell you propaganda and the death of innocent Arabs, I have nothing good to say to you guys. Things only “look” apocalyptic cause…the “majority” does nothing about it and drag on there problems!!! We could end this GAME TOMORROW!!! WHY WAIT??!!

I’m ready for this pathetic comedy. Guys who will still be able to pay rent and eat well, your a winner! I laugh at all you hypocrites that continue to ignore what’s happening and have the nerve to talk about recovery.

What’s amazing is that TOMORROW, the criminals on Wall St, White House, etc, will wake up, and continue their same selfish games again. And the majority of people will “bend over” and take it, and pollute their own environment. Personally, I think this is funny. What a joke

Highspeedloafer

For entertainment tonight I watched the debate. I was pleased to see Romney put a beat down on obama, although I don’t think either one can begin to fix what is wrong with our economy. But I must say I was glad to see that obama couldn’t even look Romney in the eye. Maybe the powers that be have already told obama he is out and Romney is in. Oh well, canning peas so I must get on with it. I am looking for a couple of guard dogs to run the property lines, maybe I can call one Peter (Schiff) and the other Harry (Dent). Those two guys I trust.

ScoutMotto

If it’s one thing I like about your article Michael, it’s that you quote big names in the market who say the things that need to be said. Straight from the horse’s mouth, if you will. We’re not hearing just anyone in the streets panicking over nothing. It’s the people INSIDE the industry that we should be listening to, and they are high up.

Mondobeyondo

It’s October. Enough said.

Tim-berrrrrrrrrrr!!

Mustard Seeds

The economic collapse is, without a doubt, happening now. It is happening worldwide. And it is devastating everything in its path. The stock market included. It is toast.

Everybody is so focused on the money. That’s all we hear about….markets, housing industry, pensions, benefits, welfare, medicare/medicaid, bailouts, QE, and the grand daddy of it all….DERIVATIVES. But it’s over. The system is dead and nothing is going to bring it back to life.

The thing we should be focusing on is what we did wrong….how we got here. We are going to have to start over again when this big mess finally hits bottom and gets laid to rest. And we are going to make the same mistakes again if we keep letting the same people control everything. Crooked politicians and their corporate cronies. Because they have a plan all right. It’s the same plan they have been working on for decades since the inception of “central banking” and the Federal Reserve. Impoverish the people. Ruin the currency. Abolish the middle class. The elite want to be the ruling class, and we are letting them.

It’s not just about the money. It’s about our schools, our communities, our industry, our churches, our freedom of speech, our right to bear arms, and how we raise our families. It’s about who we listen to from now on and who we don’t listen to anymore.

In this video, Bishop E. W. Jackson gives a message to black Christians. That message isn’t just for black Christians….it is for all Christians! Stop listening to the liars, and get back to what is right. Stand up Christians! Be Christians! Take America back!

I don’t see any crash coming within the year, I think the UK market may get into trouble around February – March 2013 tho.

Had to smile at the end of your article with the advert ‘Trade Options Now, Click here’ – another form of derivatives.

OP

Rusty

For ******************, enough of the “Stocks to crash any day now.”

OKAY???????????????

I get tired of your failed predictions day after day, year after year.

We’re in a controlled crash, not a melt-down.

Michael

Failed predictions?

Michael

Df

“We’re in a controlled crash, not a melt-down”

Uh, I’d say he agrees with you since he wrote an entire article saying the same thing. And he also wrote in this article:

“If a stock market crash does not happen this month or by the end of this year, that does not mean that the experts that are predicting a stock market crash are wrong.

It just means that they were early.

As I have said so many times, there are thousands upon thousands of moving parts in the global financial system. So that makes it nearly impossible to predict the timing of events with perfect precision. Financial conditions are constantly shifting and changing.”

mark

My advise is to have as simple a life as you can, get down on your knees often to pray, stay out of the markets, live on a farm or ranch, store food and supplies for at least a year, have the tools to protect your stuff and get to know and have a plan with your neighbors.

Colin

I worry about a stock market crash, for I feel that the crash will bury President Obama. As much as the right fears an Obama Presidency, I fear a Romney Presidency. And, after tonight’s performance, I feel we are one step closer to a President Romney.

Micheal
I read all you articles, I have watched virtually all the Keiser Reports, I regularly listen to Professor Richard Wolff’s Truth Out broadcasts and still I cannot fully comprehend derivatives.
Naturally I appreciate that they are key to the CERTAIN breakdown of the financial system and it concerns me that someone like me (who is FAR from uneducated) cannot understand it.
Perhaps you or one of your contributors could advise of an “Idiots Guide to Derivatives” so mere mortals can have some idea how this monstrosity actually works.

Michael

I will try to write more about derivatives. They can be extremely complicated, but I think it is helpful to try to think of them in simple terms. For example, if you and your buddy bet that the high temperature tomorrow will go above 70 degrees, you aren’t “investing” in anything real, are you? Instead you are just making a side bet on whether something will happen or not. That is essentially how a lot of derivatives work.

Michael

the ragged trousered philanthropist

Thanks for your reply and your attempt to simplify this conundrum.
Reading other peoples comments and your responses to them it seems like it won’t be too long before you do in fact write “An Idiots Guide to Derivatives”.
It strikes me that derivatives are the key to the world’s financial mess and we ought to know how and why such a situation operates and has been allowed to become such a problem.

Chemgal

Michael,
I think it should be noted that many “ordinary” investments such as the GLD ETF now held by Soros et al are actually derivatives themselves (as are all ETFs, and many other seemingly innocuous investment vehicles, including money market funds). These are not exotic products… God only knows how much of the supposed gold held in GLD is A) actually there, B) re-hypothecated out the wazoo, as in the China steel incident a couple of weeks ago, or C) made up of tungsten-filled bars (or an egregious combination of all three)…Sprott’s Gold ETF, while pricey, has always appealed more to me for these reasons. Indeed, it may actually reflect the actual price of gold, instead of the one suppressed by the PTB. Then there is the whole issue of accountability within the street title system, as described by Ann Barnhardt, among others; I am very much afraid she is utterly correct.

Chemgal

I forgot to add that I do still own a few of these vehicles, including the Oil ETF; but it should be reinforced heavily to the unwary that all of these commodity ETFs, with very few exceptions, primarily use futures contracts (more derivatives) to fund their operations. So even in these seemingly simple derivative ETFs one sees multiple layers of derivative values, all of which are paper bets. You are NOT buying plain old gold or oil, or for that matter, grains, or any other tangible item. You are buying laddered bets on these items, supposedly allied to an underlying asset or group of assets. So be wary–very wary–and educate yourselves. If what many are predicting turns out to be true, the possibility of systemic collapse is very high.

Optimistic Pessimist

As an investor and trader maybe I can shed some light on what a derivative is.

Firstly, let us define a traditional investment:- an investor (be they private, public or institutional) puts a sum of money into buying shares of a company XYZ. These shares are 100% owned by that party. The price fluctuates and the value goes up or down by a percentage.
Owning these shares entitles the share holder to receive (if the company is profitable) a monthly/quarterly/bi-annual or annual dividend paid out of the profits of the company which is relative to the number of shares owned by the investor. The shares may also have voting rights attached to them, so the investors can have a say in how the company is run.

Secondly, Derivatives – these are Futures, Options, Forwards, Binary options, Warrants and Swaps. I only know about Futures and a brief bit about Options as I do not use any of the others – please see the link below for further information on them.

FUTURES:- The SPOT price (which is not a future) is todays’ price of a company, commodity or currency. For instance let us say company XYZ has a SPOT price of £1.00 to Buy and 99p to Sell today. The difference between the Buy and Sell price is the SPREAD which is what the Market maker/broker makes their money on. The FUTURE price usually has two prices: a 3 month Future (expiring 3 months from now) and a 6 month Future.
As there is less known about how the asset will perform in the future then the Future prices will typically have a larger range:

I think it is worth explaining at this point that derivatives are often seen and referred to as a ‘bet’. To me this clouds the issue. A BET in the normal sense – going to the bookies you put a £1 on a horse to win. If you win you get £1 plus winnings. If you loose, you’ve lost a £1.
A DERIVATIVE is different. If you win you can make a substantial profit. However, if you loose, you don’t just loose the initial stake but you can loose far more depending on how much the underlying asset goes down by.

A BET you know what your total loss is from the outset with a DERIVATIVE, YOU DON’T – it depends how much of a loss you are prepared to take or if the Future runs out of time before the underlying asset has had a chance to recoup the loss.

With FUTURES you don’t own the shares in the underlying company so you don’t have any claim on dividends or voting rights. A Future will require you to put down usually 5%-20% of the actual share price as a premium paid to the shareholders to ‘borrow’ their shares. Similar to someone hiring some music equipment for a party – they don’t want to buy the equipment out right just have the use of it for a night before returning it to the hire shop.

Before the Derivatives market that we have currently, investors could only access 100% of the shares in a company. Nowadays that 100% of shares ‘in theory’ could all be ‘loaned’ out in Futures contracts i.e. 200% of the shares. Typically it is common for about 0.5%-2% of a companys’ shares to be loaned out but in times of volatility this can go up to about 10%-15%.

Unlike normal buying of a share a Futures contract allows the purchaser to buy(going LONG) or to sell(going SHORT). Normal investors don’t like ‘shorters’ as they see them as detrimental to a companys’ share price. This is a slightly skewed viewpoint as the shorter will at some point (either voluntarily or forced because the market has moved against them) have to close the Future and thus add extra Buying power to the market that would not have been there otherwise.

Enough about Futures – onto OPTIONS
My knowledge on options is largely theory based as I don’t really like the way they work and so have not really used them.
A Future fluctuates within an upper and lower band of the Spot price over time.
An Option says that the underlying price of XYZ will be £2 in 6 months. At the current price of £1 this option seems to be worthless. However, If you feel that XYZ is grossly undervalued and may go to £3 then you could purchase the option to then sell it in 6 months time. The Option has its own buy and sell price independent of the underlying share price (but it is related to it by some complex maths that I am not going into here). If it gets to £3 within the 6 months then the option to buy at £2 will be very worthwhile. If the price languished at £1.50 then the option to buy at £2 is worthless and it would expire causing a loss of the stake for the Option. As with a Future an Option only requires a % of capital per a share upfront.
My reason for not liking Options is that the Option has its’ own buy and sell price which can move independently of the share price. So the investor has to monitor two prices moving up and down rather than just the share price. In my view = More room for greater error.

I hope this makes sense and clarifies a few things about the derivative market for you. Apologies for any errors. Maybe someone with knowledge of warrants, swaps etc or a view from inside a bank would like to put their views forward to help the learning process.

Warning: This message may send you to sleep. Past sleep performance is no guide to future sleep success.

Night night all

OP

Optimistic Pessimist

Quick additional note – What scares me about the derivatives market is the massive leverage. In the past some brokers that have contacted me use leverage as high as 400:1.

I ran very quickly in the opposite direction.

OP

the ragged trousered philanthropist

Optimistic Pessimist,
What a great soubriquet.
Thanks for your explanation of derivatives. I shall cut and paste it, save it, and re-read it and try and clear the fog of obfuscation surrounding this “black art”.
I suggested to Micheal that he write “An Idiots Guide to Derivatives”. It seems you could do the same, however it would be interesting to see if TPTB would allow such a book to be printed.
NB I noticed in your footnote article you mentioned leverage. I kind of understand this, but are you saying derivtive contracts are levered 400 times!!!!?

Optimistic Pessimist

TRTP

At the time when I chose the name I decided it would be more fun to be an Optimistic Pessimist rather than a Pessimistic Optimist!
Glad I could be of some help in deciphering derivatives for you. The trouble with subjects that are seen as “black arts” is that once you start asking questions you dig deeper and deeper into a world you barely knew about. As I have said above I’ve barely scratched the surface on some areas of the derivatives market.
Regarding a guide book – a great idea to help people understand. I think TPTB would allow printing, however, as with most things reading theory in a book and then trying to practice it in the real world are two different things completely.

In regards to the leverage: typical leverage requires 5% – 20% of the underlying asset i.e. 5% would be a leverage of 20 times as a twentieth of the original capital is required, 20% = 5 times leverage. There are some products that have a high liquidity (Large amounts of money moving in and out on a daily basis – for instance currencies such as EuroDollar or commodities like Gold) that may only require 1% therefore 100 times leverage. That is how capital in a trading account is leveraged up but there are also some products that have a built in leverage of maybe 2,3 or 4 times. This means that if the underlying asset or index moves say 1% then the product moves 2,3 or 4%.

Combine the above and you have a recipe for gaining a lot of money or losing the shirt of your back, the house you live in and possibly any relationship you are in.

Always seek financial advice from a reputable IFA and make sure you understand FULLY what you are getting yourself into before you go through too much pain.

It isn’t any wonder Warren Buffet called them “Financial Weapons of Mass Destruction”

OP

the ragged trousered philanthropist

OP Thanks again.
Until this dialogue I had no idea that this (a dialogue) was possible.
I’ve no intention of getting personally involved in derivatives trading. I just wanted/need to know how something that could radically alter the whole world’s financial structure and thus on a microcosmic level, me too works.
It strikes me, bankers and their ilk seem like the ancient inhabitants of Easter Island and their practises will have similar consequences.
TRTP

the ragged trousered philanthropist

Further to my previous comment.
If I go into a casino I have to buy chips in order to bet and cannot bet beyond the limit of chips purchased.
How can the major banks bet in the Wall Street/City of London casinos without similar restrictions?

DEFCONStudios

Simple. Derivatives is an unregulated industry. The Worldwide derivatives market is equal to $1.5 Quadrillion dollars and the Worldwide GDP is $65 Trillion. That should put it into perspective how and why Warren Buffet called Derivatives ‘Financial Weapons of Mass Destruction’.

JustanOguy

Somewhere I saw a report that what’s driving the market right now is the mutual fund investors and the big individual investors have been quietly bailing out.

Basically… the sheeple are being led to the slaughter house. Again.

When the sell off begins, they’ll get to watch their retirement accounts sink.. Again.

By the way… you should check out the Citizens Against Government Waste report that just came out showing that unfunded liabilities for public service pensions is somewhere between the $2 to $4 Trillion dollar range.

Derivatives are the new items created out of creative banking system to make bankers rich
then if the bank collapses the govt would bail them out. The big banks are too big to fail! When govt
bail them out in fact are tax payer`s money. So what is a derivative? For instance if a bank has billions of
mortgage loan the bank can package the loan and sell it to another bank with a cut of profit. In the process bank can buy
insurance on that particular package of derivative. All in all it is just a process of making money
for the bank and CEOs themselves without really putting anything back to economy in a real sense. So it is a big web of casino. Right?

Great info as always! I would bet a lot of people do not pay attention because they think they are not “in” the market, which in most cases is far from the truth. If you have a pension or 401K a collapse will absolutely destroy your future. It has to be broken down so that average Joe on street realizes how it absolutely affects them. However, you will never see this on the MSM “programming” and articles like Michael’s need to be shared as much as possible. The sheep are fast asleep and our “leaders” prefer it that way. Keep posting Michael and Go Gators!

Michael

Go Gators!

Michael

Tom Johnson

Geaux Tigers

liberranter

I would bet a lot of people do not pay attention because they think they are not “in” the market, which in most cases is far from the truth. If you have a pension or 401K a collapse will absolutely destroy your future.

Some of us already realize that and have adjusted our expectations accordingly. While most of us would like to get out of our current 401Ks, to do so would have hideous tax implications, so we simply put up with it, knowing that, while it’s an involuntary subsidy of Wall Street and nothing more, it’s all going to end someday soon. No, we won’t have profited from the collapse (just the opposite, of course), but by not expecting ever profit from it, we won’t feel let down or imperiled. IOW, it’s like Social Security; we pay into it because we’re forced to, but we have no expectations of ever being able to draw on it. The money we’re forced to put into it is, for lack of a more appropriate description, a “cost of being able to earn a living” – nothing else. It’s a sunk cost, money flushed away. We forget it and move on. That’s what the money stolen from us to put into retirement accounts that will never see the light of day also represent. In short, we’ve kicked both the word “retirement” and the concept it represents completely out of our operating vocabulary (oh, and a heartfelt F*** YOU to the members of the “Greatest” [NOT!] and “Silent” generations for having put the causes of this mess in motion. The first ten years of my own Boomer generation can partake of that F*** YOU as well).

BTW, for those of you living on distributions from your retirement accounts right now, I hope you have precious metals or something of value to fall back on in the near future. That, or you’re approaching the end of your expected life span and won’t have to worry at all. Not meaning to sound negative, but, realistically speaking, the days of your being able to enjoy the benefits of retirement income are not long for this world.

Danny

@Geoff
I worry the same I am a Cisco Engineer her in the US but my wife and I have a small farm and live WAAAYYY out in the sticks so I hope we are covered. Does make me wonder if it all falls down who needs Cisco Systems built anyway. We do love 90% of the land, wild came and fish, mostly so I hope to fend off any looters adnkeeo it safe for my family

Irritable

But what happens if someone get as broken leg or an infection that gets bad? It will literally be like living back in the dark ages again.

nojoke4153

You have the best analysis than many bloggers about derivatives. You should write about this a lot more.

Michael

I will definitely try.

Michael

Karen

I read an article a few weeks ago about a man whom got tired of living in the human rat race he was well off but left everything behind and lived in way out in the woods built his own log cabin with what ever he could find to build it he lived totally with mother nature and loved his new life a man happened to walk up on him while backpacking in the wilderness what a surprise for the backpacker the packer wrote the story the man told him he just got tired with all the noise of civilization he also told him of the coming economic collapse and that your buying cold and silver bars won’t really help you because if you used a gold bar to trade you would not get change back how right he is a bar cost thousands of dollars so you hand it over and that’s it no change back you have lost all your money you spent on the bar he also said he would not live near any coast lines because of massive waves from earthquakes

Michael

I would not want to be living along the west coast that is for sure.

Michael

Ameen

A little punctuation would make this posting more intelligent than it currently looks….

The Claymobile.

Michael, weren’t the credit default swaps and the credit default options that were part of the cause of The Financial Panic of 08 & 09, derivatives???

Michael

Yes. That is why AIG got into so much trouble. It was not because they wrote a bunch of bad insurance policies. It was because they had a bunch of bad derivative contracts go against them.

Michael

Here in NC

Keep up the outstanding work Michael! You are truly a blessing!

Michael

Thank you for the encouragement.

Michael

Beaner

Michael, is that your car? Hope you have insurance.

Michael

Thankfully my car is safe and sound.

Michael

http://www.prepper-resources.com PJ Prepper

I thought you bought a truck?

Michael

No, haven’t bought a truck yet.

We might take one more stab at fixing the 14 year old truck we have. If that doesn’t work we will have to get another one.

You are absolutely, 100% right to focus on the OTC derivatives market. Like the US stock market in 1929, it is leveraged to very dangerous extremes. If there are a series of margin calls on the collateral supporting the OTC derivatives market/casino, the market could quickly collapse and it will usher in a second Great Depression. Watch for margin calls.

Michael

Great comment George. Most Americans have no idea what is going on with the derivatives.

Michael

liberranter

Something the PTB are deliberately trying to ensure does not change.

prepgal

We know it’s going to happen. You can only prepare so much, mentally and physically.
The anticipation is killing me, I just want it to happen already. Once again another great article, Thx.

The Claymobile.

Michael, there is a article on livingonadime.com entitled “Are THEY ruining your finances?” that I think you would enjoy. The comments are good too.

Washington

Want to Build a Badass Moped? There’s a Social Network for That October 3, 2012

The stock market is over valued because it is being propped up with tax dollars for the past few years…

liberranter

Yep, you’re exactly right. The whole 401K scam, in particular, is nothing but a Washington-underwritten (via YOUR confiscated earnings) subsidy of Wall Street. (If anyone does not think this to be the case, try NOT contributing at least one percent of your income to a 401K or similar program and watch your income taxes SKYROCKET). The market has ALWAYS been a rigged sucker’s game. Unless you’re the one percent on the inside, you’ll break even at best. Those who claim that they “earned” money in the market over the long term almost never take into consideration the inflation factor. If they did, they’d find out that they’re right back where they started from.

http://www.surviving12-21-2012.blogspot.com doctor blue

Well again you are right Michael.
But IF the housing crash, 2008 crash, tech bubble crash, crash of Greece and spain was the 800 lb. Gorilla in the room.
The derivatives market is the 12 billion lb. (PISSED OFF) Gorilla behind door number 2, (and boy is he pissed).
I would NOT want to be the one opening that door, NO matter what, but I am affraid that door number 2 is next to be opened and we will ALL open it very soon!
And again the gangsters I mean Banksters will ask Washington for a bail out and I guess Unkle Ben will oblige them, or try!

Optimistic Pessimist

It won’t be opened – it’ll be smashed down.

OP

Dale Mallon

With the Dodd-Frank banking regulation bill in effect, why doesn’t this control or regulate the derivatives?

Michael

There are a couple very weak regulations about derivatives in Dodd-Frank, but there is very little in there that is having a real impact on the marketplace.

Michael

former Cal girl

Is it possible the President was distracted by some pending crisis last night at the debate? He sure left quickly after the debate and seemed very distracted to me. Just saying…

Keep up the good work Michael,I get a educated through your posts.

Mustard Seeds

That is exactly what I was thinking.

liberranter

The only “crisis” that imbecile faced was the possibility that he’d at some point be called upon to explain himself. Like the idiot who faced him in that theatrical farce that was ANYTHING BUT a real debate, the Moron Puppet-in-Chief was terrified that someone (certainly NOT a member of the MSM) would try to ask him a question of substance, something that would require and honest answer – unlike the nonsensical babble that constituted the “debate.” For this reason, he had to beat feet out of there as soon as possible to prevent that from happening.

Did you actually watch that nonsense? If so, was it because it was given to you as a homework, research, or job assignment? Was someone holding a gun to you and forcing you to watch it? I cannot possibly imagine anyone paying it the slightest bit of attention for any other reason than being under duress.

http://kboo.fm/presswatch Theresa Mitchell

Your hedge against collapse?

Goods, stockpiles, sure… –but you must have community. If you wait until the crash, to break your consumer-enforced alienation, you will be too late. This means learning who your neighbors are, and building and strengthening ties in your affiliated, extended family, “kith and kin.”

I have a community that I will not fail to support, and I know they will back me up, too. There are hundreds of us, and thousands that know me by name. We need not fear theft, expropriation, arrest, et cetera, because we know to stand for each other.

It’s a radio community. Do you have something similar? It could be a church, a bowling league, anything–but it needs to be people you can trust, and you need to do your part for them. For years.

And from reading these posts, I’d say most of you need to change. Big time. Compassion is a survival value.

William

The collapse is happening in slow motion. However, there is the divergence of the online economy vs the offline economy (physical world). You have to know how to make money related to the online economy, in some fashion (even Angie’s List), to survive.

http://www.propagandafront.de/gutscheine/ Thommy

There wont be a stock market crash in the forseeable future. At first there will be a bond market crash. The investors will flee in the stock market. The next crisis is a government bond crisis. First in Europe and then in the US.

iSeeNow

Micheal, I have a question!!!!!!!!!! So the Federal Reserve’s QE3, and maybe QE4, pretty much gives banks more money so they can buy and play around with more derivatives right?! And buy mortgages for cheap, among other things.

Wow, and not enough people are confronting this issue. Seriously, today the banks are playing around with derivatives, and tmrw they will do it again, cause the game continues. AAANNNNDDD they won’t talk about this issue in the scripted presidential debate!

Michael

That debate was really something, eh?

Michael

iSeeNow

Yessir!! The debate was great acting indeed! OF course, the actors never touch on the 16+ critical issues that everyone at theeconomiccollapse.com KNOWS about. And let’s not forget the other “ghost” issues like geo-engineering or cloned animals (that people now eat). But hey, let’s watch these great debaters prove that they’re better than “the other guy”. Haha. Is this how we elect leaders?

I’m reminded of a verse in the Tao Te Ching on the Decline of Tao:

On the decline of the great Tao, the doctrine of ‘humanity’ and ‘justice’ arose. When knowledge and cleverness appeared, great hypocrisy followed in its wake.

When the six relationships no longer lived at peace, there was (praise of) ‘kind parents’ and ‘loyal sons’. When a country fell into chaos and misrule, there was praise of ‘loyal’ ministers.

So now the question is, when did “loyal” leaders become so scarce? Wasn’t that how our leaders WERE? In fact, when did good people in general become “scarce”? You only truly begin to value & praise something when it’s scarce (almost gone, lol) right?

Arguing is the method that we use to determine these loyal leaders and we praise this method. Just like the way people praise religious doctrines because they are what will “restore” order and justice and make us “human beings” again. So the man with true insight will ask, “Why have you “fallen”? Why rely on doctrines to make you who you REALLY ARE? How can the bible bring you closer to GOD (the tao, Brahman, Atman, Infinite Creator, it’s all the same reality)? ARE YOU NOT A CHILD OF THE CREATOR, A PART OF HIM/HER, ALREADY CONNECTED TO THE SOURCE?! What hypocrisy you speak of. You are playing a game now. You won’t admit that you already are what you seek. You don’t see the potential, you don’t truly see yourself.”

So the mystics say stop playing your game and change your perspective of things. You are a being and your life is like your own dream. Live it how you would like too. All choices are simple really. People must ask themselves, are things really complex? Do tax cuts and jobs really matter? Why are we talking about them like they’re scarce? Who’s taking our money, our wealth?

Well, back to reality. Most of our fellow brethren would like to continue their games and not see things for what they are. I have no authority to infringe on their free will, but I won’t play there game.

Oh, And the bankers around the globe are still making their derivative bets again. I guess it’s time to finish prepping. Thanks for the informative articles Micheal. We can still reach out to those willing to see what’s really happening!!

Michael, I’m sorry that you felt compelled to watch the “debate.” I’m sure, public-minded soul that you are, you felt that you were doing it for “our” benefit, an act of “noblesse oblige,” as it were. I wish I could have told you in advance to spare yourself the agony.

Michael my wife has a 401K and looking at the coming crash and or the government taking it, we are looking at cashing out and facing the tax losses. At least this way she doesn’t loose all of it and we will buy junk silver, food and other supplies. What do you think? I hear others telling people to get it while you can, but it’s a little scary.
Thanks

Michael

Bob:

I don’t give out specific financial advice (for a variety of reasons), but what I would say to do is to do the best research you can and then do what is right for you and your wife.

These are challenging times and the decisions are not always going to be easy.

Michael

liberranter

Personally, I would say that if you’re lucky enough to have a 401K plan that isn’t under house arrest, pull your money out. Unfortunately, not all 401Ks let you do this, mine being one of them. It makes me wonder what the fund management firm is hiding!

Muskogee Jeff

Michael, is it? I enjoy your insightful articles. Just recently found this blog, didn’t realized half of what I have read on activistpost was from this site!

At any rate, I try to remain optimistic, but I can’t help but feel somewhat depressed. My wife and 2 small children are preparing the best we can, but it is difficult to convert paper assets into food, gold, land, etc, when you don’t have any assests to begin with! We have zero debt except for our mortgage, we live in a small town with cheap house payment, make a decent wage (or what *USED* to be consider a decent wage) for my area, but still have no fundage. We have been trying to sell our house and purchase a measly 5 acres out in the country Oklahoma, but man has it gotten expensive! I want to prepare, and am doing all I can, but it doesn’t seem remotely close to being enough!

Sorry for the pessimistic rant. I think I just needed to get it off my chest. Perhaps this is not the best venuefor it, but oh well.

It does give me hope to read these articles and see all the comments from all you wonderful people. Makes me feel less alone!

Here’s hoping for the best ts.

Thanks

Michael

I think that communicating with one another helps all of us feel less alone.

Michael

Optimistic Pessimist

How sad that you have to state this. Nobody should ever be alone if they don’t want to be. Learn how to extend the hand of friendship and it will come back 4 fold.

OP

Mondobeyondo

This goes out to all the demoralized and depressed out there (and I know of what I speak):

Don’t worry, be happy.

Landlord says the rent is late… he may have to litigate.
Don’t worry, be happy.

Driving down the freeway, your car smashes, the next morning, stock market crashes.

Don’t worry, be happy.

If that doesn’t work, you might want to listen to “Always Look on the Bright Side of Life”, by Monty Python.

And if you’re STILL feeling down… here are a couple more suggestions that will surely lift your mood:

What goes up must come down. The stock market is no different. It won’t go up forever. There are reasons why it will crash (lack of confidence in the U.S. and global financial systems, and QE3, among others.) But, Make No Mistake (copyright 2008 Barack Obama), the stock market is going to suffer some severe losses in the near future.

Don’t know if it’s going to be a repeat of 1929, but I get this queasy feeling in my stomach… that this baby’s going down so fast, it will make the Titanic jealous.

Mondobeyondo

Which reminds me, I need to feed my two betta fish that are in my bedroom. Ohhh, I know the one-liner that’s coming. Yes, I really do sleep with the fishes. Ba-dummm-bumm!!

Irritable

I find it interesting that mainstream news like USA Today are fearmongering about a crash. Most of us who read your blog are pretty much in the know that all major media, including printed form, are owned by the enemy, so why in the heck are they now promoting “gloom and doom?” (I use that term in an ironic sense).

On the other hand, I often check out the horribly written news at yahoo.us and the liberals there are always, always saying how the economy is getting better.

It’s almost like it’s just another reflection of the so-called “Elite” (I hate that word for them, it’s too good a word for a bunch of psychopaths) and their belief in Chaos and to create confusion among the masses so that we don’t really know what is going on.

Kim

So if someone says it’s not a matter of if but when something will happen and it does not happen for 10, 20, 30 or more year’s does that make the person right or just ridiculous?

Seriously Alex Jones has been spouting this BS since 2006 (probably longer but that is when I started listening).

2006 came and went and nothing.

2007 came and went and nothing.

2008 came and went and nothing.

2009 came and went and nothing.

2010 came and went and nothing.

2011 came and went and nothing.

2012 almost over and nothing.

I stopped listening to Alex Jones in 2007. The fear mongering was just absurd.

Imagine if I had stopped living my life in 2006 because of what might happen?

People are getting rich of this fear mongering BS and you can guarantee it’s not the preppers who are making money had over fist because people are afraid.

Fear. It drives many to wait and soon they wake up old and gray, their life almost over and they are still waiting.

Don’t be that person.

I have had people tell me they won’t do any new advertising until after the election. As if Obama or Romney could really have that much control over their lives.

The truth is that the fear has the control and power. Not anyone in Washington. Fear can boost an economy and also cripple it.

Michael

2008 came and went and nothing happened?

Are you sure about that?

And nobody is telling you to stop living your life.

I think you are missing the point.

Michael

Kim

Michael, sure a lot of people got suckered by mortgages that they could not afford to pay because of job loss, what have you but those that lived within their means for the most part are still doing so and were in 2008. Housing booms and busts happen. If happened in the eighties also.

These things are cyclical. You surely can’t expect the good times to persist decade after decade?

Greed comes into play. People make stupid decisions. Governments and banks come up with clever ways to sheer the sheeple. But if a people would not be suckers the outcome would be far less disastrous for many.

The only thing 2008 did to my business was make it stagnate. I make enough to just get by but not to be able to afford the things I want: such as a house and health insurance. Yet this situation is in party my fault because I could close the business, get a job working for someone else and be more secure financially. It may come to that point but I do not know when or if it will.

Michael I am sure your business/income in regards to the sponsors on your website is pretty nice. After all you receive so much traffic. People are addicted to doom and gloom. Even I am. That’s why I always check out your articles. Especially when I am having a really bad week business wise.

I guess if I feel like if the whole world is going to pieces then maybe I have no reason to make changes in my life and finances. After all why bother? The end after all is nigh. Isn’t it?

As for housing around here people are overbidding on foreclosures at 30-40% over asking. Just ask the realtors when you tell them you want to offer 30-40% under asking price. So really it seems to just be another case of the haves and the have nots.

And yet all throughout history there are stories of those who made money off the suffering and hard times of others. 2008 and investors snapping up foreclosures are no exception to this rule.

I really wish I knew what the point to all the doom and gloom articles was Michael. It seems that no matter how bad things get that the world keeps on spinning, people get married, have kids, die. All in the midst of economic crisis, scandal, tsa groping and more.

What is the point in knowing about things you have no control over? Other than to just stew in frustration.

Michael

Kim:

There is hope in understanding what is happening and getting prepared.

Just look at what is happening in Greece and Spain. Unemployment is above 24 percent in Greece and over 25 percent in Spain and people are digging in supermarket dumpsters looking for food.

Don’t you think those people wish that someone would have warned them what was coming?

Well, we are headed down the same road as those nations. We are living in the greatest debt bubble in the history of the world, and the crisis of 2008 was just a “hiccup”.

So what will a real crash bring to this nation?

Eventually we will all find out, and at that point nobody will leave any more doubting comments.

Michael

liberranter

2008 came and went and nothing happened?

Are you sure about that?

I see you caught that too. Kim’s credibility instantly evaporated with that one.

http://www.prepper-resources.com PJ Prepper

The fact that she is on this very website and taking the time to respond speaks volumes. Good luck Kim!

It’s been a hard day’s night, and I’ve been sleeping like a log
It’s been a hard day’s night, wish I were working like a dog…

Erik Bergum

Our secular mainstream media as of today is misinformed and/or distorted telling us the economy is going to get better. However, I truly believe there is going to be a global economic collapse in the near future, all a set up for a one-world government.

The best form of prepping is getting right with God.
God takes care of His own.
Accept Jesus today.

GSOB

Fleur,

when i read your comment. immeadiatley i said oooorrrahhhhhh!

this guy

************ idiot. “God takes care of his own”. It’s almost like you have completely forgotten the atrocities that occurred in WWII.

MDH70777

The Creature from Jekyll Island [2nd thru 5th] any of these will do. I prefer the earlier ones that show that both the “conservative” Republicans and the “liberal” Democrats are Socialists at the end of the (century) day. One is turtle, the other a rabbit; both end up at the same destination.

the ragged trousered philanthropist

Spot on.
Or as Orwell noted in “Animal Farm” in the end it was impossible to tell the pigs from the people.

http://www.marijuanaparty.ca Blair T. Longley

Neolithic civilization has been a pyramid scheme, growing and spreading at an exponential rate for about 10,000 years.

The mathematics of exponential growth was behind the development of derivatives. They make no sense, they appear to be like loony tunes cartoons, because they are the result of the runaway triumph of frauds.

The fundamental fact is that privatized fiat money systems were legalized, and backed by the power of sovereign governments. After giving away the power to make money out of nothing to private banks, et alia, those who had that power, of course, found every possible excuse to use it …

Privatized fiat money is a crazy cult that was forced to become our state religion. It is a faith based money, backed by force. That enabled those frauds to be amplified to astronomical sizes! I.e., those funny money units could buy 10 planet Earths, and the weapons to back that up could destroy 10 planet Earths.

Derivatives are based on being able to make money out of nothing to gamble with, and those who can do that constantly do more and more of that, as much as they can. The system is set up so that if they win, they keep the profits, while, if they lose, everyone else has to pay. That was merely another one of the basic ways that the entire fraudulent accounting system is set up to cut the world in pieces in such a manner as to privatize the profits, while socializing the losses.

We use bent rubber rulers to measure our economic activities. Every decision we make is based on magical tricks, stacked on top of previous magical tricks.

We do NOT run our lives according to mathematics that is consistent with the physical world, rather, we actually run our lives according what the mathemagicians say.

Those mathemagicians can make money out of nothing, to use to gamble with. Of course, that system is totally out of control runaway fraud, presided over by the Fraud Kings, the central banks.

Even more tragically, the almost total triumph of huge lies, backed by violence, makes rational public debate about the chronic political problems inherent in the nature of life practically impossible.

We should be debating how to implement better death controls, and corresponding debt controls, to limit our runaway exponential growth, in better ways. However, since those who actually do the death controls are those who were the best at lying about that, such a debate is Fringe Cubed, at best.

Runaway financial growth overshooting into collapse MUST be inevitable in any exponential growth system. The problem is that we are getting nearer and nearer that tipping point, faster and faster.

Exponential growth seems GREAT … nearer the beginning, but then becomes a fatal cancer closer to the end. We MUST evolve social systems that will better balance the currently runaway systems of lies, backed by violence. However, THAT requires that we admit that those systems are, and MUST ALWAYS BE, systems of organized lies, operating organized robbery.

Derivatives were the runaway triumph of those systems. They can NOT be stopped, they could only be brought back into better dynamic equilibria. However, that basically obvious political point is a Fringe Cubed position at the present time.

We are inside a combined money/murder system. There is no way to change one without changing the other. The only good solutions have to change both, using more information, and a higher consciousness and self-awareness of what we are doing.

Tragically, the REAL world now is way, way too dependent upon more lies, backed by more violence, as the way to resolve those problems. Equally tragically, most people propose the impossible alternatives that there should be no lies, and no violence, no frauds, and no robberies, as the idealized “solutions” … which ALWAYS backfire in the real world, which is WHY the ruling elites promote those impossible ideals, and their controlled opposition does too!

We ARE getting closer, faster, to the collapse of the globalized pyramid of debt slavery, backed by wars based on deceits. However, the public is almost nowhere closer to actually understanding that in better ways!

Anyway, keep up the good work attempting to enlighten the public about derivatives, etc.,
and how and why the established economic systems ARE headed towards collapsing into chaos … Maybe, afterwards, we could rebuild better systems???

GSOB

A wonderful passage Blair T. Longley

1 John 5:19

We know that we are children of God, and that the whole world is under the control of the evil one.

the ragged trousered philanthropist

What a fantastic reply.
You clearly have a very good grasp of what’s what and thank you for sharing it.
I’ve cut and pasted it and will read and re-read and no doubt pass it on to other like minded individuals.

paul

All that prepping is not that new. Humanity survived that long through prepping. The barn, the pantry, the fridge, canning, curing, drying, sausages, sauerkraut, dills were developed over a long time.
Just in time isn’t new either. From hand to mouth is the primary feeding technique.
When the accountants, shareholders, MBAs started to abolish warehouses and storerooms in factories to replace them with trucks on highways, they started to reverse evolution for the quick buck.
The real losses do not occur in warehouses. The real losses occur through volatility, ups and downs, boom and bust, as every bust includes destruction.
Destruction of skills, organisation, structure.

All this hand to mouth, just in time is still vulnerable to weather and climate, as well as to population explosion.

Derivative traders would praise trillions of grasshoppers, or termites, or whatever, as long as there are trillions.

An engineer doesn’t mind the color of a bridge, as long as you can cross that river in sunshine, rain, snowmelt, this year and 20 years down.

Optimistic Pessimist

You are spot on with your analysis – especially about the Engineer – makes you appreciate the little details of life and the magnitude of the human imagination when it comes to creativity in trying to make life better or easier.

OP

BimBam

I didn’t read this story till now, but earlier I was looking at some stock charts and I told myself these look like they will plunge…. then I read this story.

So, yeah it looks like a real BAD tumble sometime in a couple of weeks or so.

steven

your right bimbam. the stock market will plunge at least 7000 points in the year 2015. it is the shemitah year, which is every seven years. I can explain more if you want to know

MeMadMax

Its like a nuclear bomb, with a twist:
The bomb has a timer on it for everyone to see, but instead of counting down it is randomly picking 4 numbers, and you pray that it doesn’t hit 0000. At the same time, it has motion detectors on it. You can’t just run up to the damn thing to defuse it otherwise you will just piss it off. But the guys in the know, know that they can slowly creep up to it without setting it off because it uses cheap chinese detectors. All the while this is happening, Americas’ enemies have a trigger to blow the bomb. But, you can’t just pull the trigger to blow the bomb, there is a special sequence to do it, so all these guys are working like mad on figuring out how to blow the bomb.

So, moral of the story?

The economy is ready to blow. You can’t just make sweeping changes to it without setting it off. But if you do nothing it eventually blows. And at the same time other countries are working on trying to blow the economy as well, like china for example…

http://pennypincherpersonalfinance.blogspot.com Penny Pincher

Don’t forget the possibility that the cheap Chinese sensors are rigged to be manually set off when the Chinese think the moment is the most damaging. Like just after a bunch of people sneak up on them.

1) So, for the past century 3 market crashes happend in October and that makes the month “diabolically frightful”? Look at it this way – in 97% of the cases there was no crash in October. That makes it a pretty safe month in my book. How often do you find trades where the chance to win is 97%?

2) Doug Short finds the market overvalued by several measures? The market has been overvalued by several measures pretty much all the time since the late 90s. An overvalued market means low expected future long-term returns – but it doesn’t predict a crash.

3) Peter Shiff has been bearish on everything except precious metals since forever. Him being bearish now hardly makes a difference, let alone predicts a crash.

4) Soros didn’t “dump all his holdings in JP Morgan, Citigroup and Goldman Sachs”. He just sold a large position.

5) So, Soros and Paulson bought gold? Gee, what could that mean? Why, it means that they believe that the price of gold will go up, duh! Hint: The price of gold doesn’t go up in a crash. It didn’t go up in 1929, 1987, or 2008. It falls together with everything else, as margin calls force people to sell whatever is liquid. Gold might go up after a crash, it might go up if there is inflation (or at least inflation expectations) – but it won’t go up in a crash. So, these savvy investors buying gold means that they do not expect a crash – they expect inflation. With all this QE-forever, I’d say that’s a no-brainer.

6) Just because something “is coming” (i.e., is inevitable) does not mean that it is imminent.

7) Every time somebody predicts a crash, the crash does not happen. Of course, when a crash happens, a bunch of people nobody has ever heard of before come out of the woodwork, claiming to have predicted it. Of course, they might have predicted 30-40 of the last 2 crashes. Even a stopped clock is right twice a day.

8) There will be no crash this October. I am predicting it.

GSOB

We all hope you are right Vess

Snoopy the Economist

Vess,
Gold ‘typically’ crashes along with equities but it all depends on the circumstances. When fiat currencies are seen to crash (be worthless as is the case here) gold and silver could skyrocket.

Monnie

Vess has a point. No, you don’t get credit for a prediction that comes to pass many years, decades, or centuries later. HOWEVER, that will provide little comfort for those who chose to ignore warnings because “they cried wolf” too many times, when the big crash DOES occur. Schiff accurately predicted the collapse of the housing bubble, and he called it in 2006—and nearly everyone laughed at him. Vess, better to be somewhat prepared and see the crash NOT come, than to be helpless if (when) it does.

Gary2

if one predicts a disaster every month eventually they will be correct. This is called guessing which is all Michael is doing.

steven

there will be a stock market drop in 2015-16 and it will be dramatic. We are in the shemitah year which is every seven years. Look at the past 40 years in the stock market. Every seventh year the stock market declined.

amicusbriefs

If a bank with phantom capital is holding up the artificial compensation of the corporations’ directors, officers and shareholders, then the NYSE’s position is perceived affluence only. That they shun hard assets for intangibles further weakens their claims of solvency. Those remaining operate on a rapidly decreasing quotient of faith. JPMorgan can’t steal enough homes to cover their derivative losses. Their vast reserves of tungsten bars won’t buy their lives when the time approaches.

kelly

read the harbinger book and you will see the hedge is down and GOD is going to let America fall because we don’t put him first.

Louise in MO

I’ve never been a gambler,so I’ve never invested in the stock market. I’ve taken the safe but sure bank cds and treasury bonds. Yes, I haven’t had an enormous rate of return, however, I can sleep at night without the worry that I’ll be wiped out when the market crashes.

Because of the information garnered at this site I have been “prepping.” I have what I need for myself and others for at least one year.

If we get more time before the collapse occurs I’ll keep on preparing for the inevitable.

Michael, although I appreciate your articles warning people about “true” inflation rates and other articles pertaining to the U.S. dollar and bear markets, what I find lacking is a plan to protect yourself.

I really hate to self-promote, but our firm (sternwealthadvisors.com) protects clients in down markets and we have a plan to profit from the next major decline. Many money managers don’t know what to do, but we are ready to act with a defined plan to protect and even profit from a meltdown.

Old Advisor

We are in the midst of a slow motion economic crash, or series of adjustements, right now and have been for years. In the last four years the government has kicked the can down the road by going $5 trillion into debt so that the economy could grow by $1 trillion. This foolishness only goes on so long until the boom is lowered and the can gets kicked down the road shorter and shorter distances as the wall approaches. The wall is there around 2015 and the entire second half of the decade will be spent picking up the pieces and trying to go on. The end comes as global demand for oil exceeds global supply and we try to adjust to a new energy paradigm. Cracked natural gas will not fully save us. Prepare for an emergency that will last the rest of your life after that.

Mark

The only hope that you have is not in money, but in the rosary. Pray the rosary daily (Blessed Mother at Fatima 1917).

90404

why, how often is Mary mentioned in the New Testament?

dla

I really enjoy this site and while i do not agree with extreme prepping stuff, i do believe we are being offered an opportunity to get in at the ground floor of the stock market when it hits bottom. We all know that the JP morgans of this world control everything. Knowing this i do not understand why I never read on prepping blogs on how to set aside some funds for investing. In my mind the markets are gonna be on sale to say the least. I understand having food,guns,shelter and so on which to me is just common sense and i have always had an excess of those things before the economy tanked years ago. We can’t stop what is coming but i think setting aside a few thousands dollars to invest in the stock market is wise for anyone with basic knowledge of how much the market controls our lives and future. Eventually the markets will see liquidity and anyone who gets in at the bottom will profit in the future. We might not see the true inflation damage of the quantitative easing programs for years to come and buying stocks will be another way to protect yourself. The QE money that is flooding the markets is not in circulation. It is sitting on balance sheets waiting to be loaned out which might not happen for quite awhile. So the inflation that we see now is not the colossal inflation that is coming. For those of us that are struggling day in and day out. The coming crash might be the wealth transfer that changes ours families future. Silver and Gold on hand is nice but if history is repeating itself then those who have never invested might want to reconsider?

m

Stock up on food and supplies when they have a good sale. How can it hurt?

Grillge

I have created a post on International preppers showing that the stock market charts are saying there is going to be a crash like never before.
I have tried to explain it the best I can so have a read, there are charts to help you understand what is going to happen. here’s the link.